Investment objective & strategy
As of Feb. 25, 2026 · prospectusObjective. High level of current income, consistent with preservation of capital.
Strategy. Under normal market conditions, the Fund invests at least 80% of its net assets in U.S. government securities. U.S. government securities include fixed-rate mortgage securities and adjustable-rate mortgage securities (ARMS) and other mortgage-backed securities, including collateralized mortgage obligations (CMOs), which are issued or guaranteed by the U.S. government, its agencies or instrumentalities, including government-sponsored entities. The Fund also invests in direct obligations of the U.S. government, such as Treasury bills, bonds or notes, or its agencies instrumentalities or sponsored enterprises. The Fund currently targets an estimated portfolio duration of 1 to 3.5 years. In comparison to maturity (which is the date on which a debt instrument ceases and the issuer is obligated to repay the principal amount), duration is a … Under normal market conditions, the Fund invests at least 80% of its net assets in U.S. government securities. U.S. government securities include fixed-rate mortgage securities and adjustable-rate mortgage securities (ARMS) and other mortgage-backed securities, including collateralized mortgage obligations (CMOs), which are issued or guaranteed by the U.S. government, its agencies or instrumentalities, including government-sponsored entities. The Fund also invests in direct obligations of the U.S. government, such as Treasury bills, bonds or notes, or its agencies instrumentalities or sponsored enterprises. The Fund currently targets an estimated portfolio duration of 1 to 3.5 years. In comparison to maturity (which is the date on which a debt instrument ceases and the issuer is obligated to repay the principal amount), duration is a measure of the expected price volatility of a debt instrument as a result of changes in market rates of interest, based on the weighted average timing of the instruments expected principal and interest payments and other factors. Mortgage-backed securities represent an interest in a pool of mortgage loans made by banks and other financial institutions to finance purchases of homes, commercial buildings and other real estate. As the underlying mortgage loans are paid off, investors receive periodic principal and interest payments as well as any unscheduled principal prepayments on the underlying mortgage loans. The mortgage-backed securities purchased by the Fund may include bonds and notes issued or guaranteed by U.S. government-sponsored entities, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) and by the Government National Mortgage Association (Ginnie Mae). The Fund currently focuses on mortgage-backed securities issued or guaranteed by Fannie Mae and Freddie Mac. Government agency or instrumentality issues have different levels of credit support. Ginnie Mae pass-through mortgage certificates are backed by the full faith and credit of the U.S. government. U.S. government-sponsored entities, such as Fannie Mae and Freddie Mac, may be chartered by Acts of Congress, but their securities are neither issued nor guaranteed by the U.S. government. Although the U.S. government has provided financial support to Fannie Mae and Freddie Mac, no assurance can be given that the U.S. government will continue to do so. Accordingly, securities issued by Fannie Mae and Freddie Mac may involve a greater risk of non-payment of principal and interest. Investors should remember that guarantees of timely repayment of principal and interest do not apply to the market prices and yields of the securities or to the net asset value or performance of the Fund, which will vary with changes in interest rates and other market conditions. To pursue its investment goal, the Fund may invest in certain interest rate-related derivative transactions, such as interest rate futures contracts and options on interest rate/bond futures. The use of these derivative transactions may allow the Fund to obtain net long or short exposures to selected interest rates or durations. These derivatives may be used to hedge risks associated with the Funds other portfolio investments and to manage the duration of the Funds portfolio. The Fund may invest up to 20% of its net assets in other securities, including Asset Backed Securities (ABS) and non-agency CMOs, issued by a private entity.
Top holdings
As of Jan. 31, 2026 · N-PORT| Security | Ticker | Value | % of fund |
|---|---|---|---|
| US TREASURY N/B | — | $20.11M | 5.30% |
| US TREASURY N/B | — | $18.29M | 4.82% |
| US TREASURY N/B | — | $15.17M | 3.99% |
| FNMA | — | $12.79M | 3.37% |
| Franklin Institutional US Government Money Market Fund | INFXX | $11.60M | 3.06% |
| US TREASURY N/B | — | $11.08M | 2.92% |
| FN MA4979 | — | $10.68M | 2.81% |
| US TREASURY N/B | — | $10.13M | 2.67% |
| US TREASURY N/B | — | $10.08M | 2.66% |
| FNMA | — | $7.85M | 2.07% |
Portfolio moves
Oct 31, 2025 → Jan 31, 2026How many positions this fund opened, exited, grew, trimmed, or left unchanged between its two most recent N-PORT snapshots — net changes between point-in-time reports, not a trade log.
Similar funds
Funds whose portfolios most overlap this one, by weight| Fund | Overlap | Net exp. |
|---|---|---|
| Franklin Short Duration U.S. Government ETF · FTSD | 29% | 0.25% |
| Global X Short-Term Treasury Ladder ETF · SLDR | 9% | 0.12% |
| iShares iBonds Dec 2027 Term Treasury ETF · IBTH | 9% | 0.07% |
Advisers
| Firm | Role |
|---|---|
| Franklin Advisers, Inc. | Adviser |
Footnotes
- Expense ratio as of February 25, 2026, from the fund's prospectus.
- Net assets and holdings count as of January 31, 2026, from the fund's N-PORT filing.
- Total return for calendar year 2025, before tax and after fund expenses. Computed by compounding the twelve monthly total returns the fund reported in its SEC N-PORT filings for 2025 (the latest prospectus does not yet chart this year).
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